Australia: Nexus to continue construction at Longtom gas field

Australia: Melbourne-based Nexus Energy will resume the construction of its Longtom natural gas field in Bass Strait in September.

The company is waiting for the onsite arrival of the 'Rem Etive', a new diving support and installation vessel. The vessel is owned by TS Marine of Singapore.

The vessel Nexus had originally been using was demobilised in June after a charter contractual dispute.

The Longtom Gas Field is located in the Gippsland Basin, offshore Victoria. Longtom was discovered by BHP in 1995 but was considered non-economic.

The Longtom-1 and ST1 discovery wells encountered a 260-metre gas column in the Admiral Formation. This was followed by the Longtom-2 appraisal well, drilled by the VIC/P54 Joint Venture in 2004, which also encountered several gas-bearing sands (some older than previously known).

The Longtom-3 well, drilled in July 2006, confirmed the commercial potential of the Longtom field when an estimated flow rate of over 75 MMscf/d was recorded during the second production test over several reservoir sections. Two production tests were conducted on the Longtom-3 well which proved highly successful.

A gas sales agreement for Longtom gas was signed with Santos in December 2005. Santos has agreed to process up to 450 PJ of raw gas from the Longtom field through its existing Patricia Baleen facilities near Orbost, Victoria.

Following the drilling of the Longtom-3 well and subsequent reservoir studies, international consulting firm Gaffney, Cline and Associates (GCA) confirmed contingent resource estimates for Longtom at 435 PJ of gas and 5.2 million barrels of condensate.

Of this, Nexus has booked proven plus probable reserves of 350 PJ of gas and four million barrels of condensate to the project reflecting the sales volumes currently contracted to Santos.

Nexus made a final commitment to the development of Longtom in April 2007 following completion of commercial arrangements for financing the development. The production license was granted in September 2007.

The Longtom-3 well is the first of three production wells required for development of the field. The well has been suspended and is now ready for commercial production without further rig intervention. The flow capacity of Longtom-3 alone is expected to be sufficient to supply the anticipated maximum contract rate requirements for the Longtom field.

The second Longtom production well, Longtom-4, was successfully drilled and flow tested in September 2008. Timing of the third production well will depend on the results of Longtom-4 and the field's production performance over time.

Gas produced from Longtom wells will enter a new 12" (30.5cm) pipeline and will be transported from the field to the end of Santos' existing Patricia Baleen pipeline, 17km away. The raw gas will then continue along the Patricia Baleen pipeline to shore where it will be processed at the existing onshore gas plant.

First production from the Longtom gas project is anticipated in the fourth quarter of 2009.